37signals

Independent work is protected through few management layers and limited coordination.

How it works

Small product teams of roughly three own an end-to-end project slice.

Why it is used

Reduces communication overhead and handoffs.

Trade-off

Creates specialist bottlenecks and key-person risk.

Best fit

Mature product teams where scope can be separated cleanly.

People at the same role and level receive the same pay.

How it works

People at the same role and mastery level are evaluated through a common pay framework.

Why it is used

Reduces negotiation-driven inequity and uncertainty.

Trade-off

Can make it harder to respond to scarce skills or differing market conditions.

Best fit

Relatively small organizations with stable role and level definitions.

Career growth is defined through craft mastery rather than management.

How it works

Craft mastery is described across five levels and progression is not tied to becoming a manager.

Why it is used

Makes expert contribution paths and expectations visible.

Trade-off

If levels become static they can compress the diversity of actual contribution.

Best fit

Teams that want to preserve technical and creative expert tracks.

Reviews are frequent in year one, then documented annually.

How it works

Expectations and growth are discussed through more frequent first-year reviews and annual written reviews thereafter.

Why it is used

Creates a regular checkpoint with low bureaucracy instead of continuous scoring.

Trade-off

An annual cadence can surface issues too late and cannot replace everyday feedback.

Best fit

Stable, mature teams with close day-to-day collaboration.

Each year 37signals shares 10% of company profits with employees. Everyone with two years of tenure takes part; one share accrues per month from the second anniversary, and accrual stops at ten years. The payout is made in cash after the previous year’s books close, usually in March. According to Jason Fried’s October 2026 LinkedIn post, the program has paid employees more than $24 million since it began in 2020; the company has never offered stock options.

How it works

The pool is a fixed share of annual profit (10%). Distribution depends only on tenure, not performance or salary: shares are counted by month, so there is no cliff between December and January hires. Anyone who resigns or is let go before the payout date forfeits their shares.

Why it is used

In Fried’s words, real cash instead of “future maybe money”: a company with no investors, funded by customers, can share its success without equity or a cap table. The tenure formula avoids individual competition and rewards staying.

Trade-off

It is not guaranteed: the handbook asks employees to treat it as a true bonus and not budget around it; amounts can vary widely or not be paid at all, and the company can amend or cancel the program at any time. There are no shares in the first two years, and anyone who leaves forfeits what they have accrued. The $24 million figure comes from Fried’s personal post, not from the handbook.

Best fit

Profitable companies without outside investors that value long tenure, and where stock options cannot promise liquidity or a cap table is unwanted.